After Brexit, should Britain have a deal with the EU like Norway?

After the Brexit referendum, anxious Brits started frantically Googling the term ‘Norway model’. This wasn’t because they were desperately looking for the latest fashion photoshoot from their favourite Scandinavian supermodel. It was because the economic future of their country is going to depend, to a large extent, on the type of future trading relationship Britain follows with the European Union.

The “Norway model” means having access to the EU Single Market via an organisation called the European Free Trade Association (EFTA). This is a regional trade organisation consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland.

EFTA countries can trade and do business with EU countries, mostly free (though not entirely free) of tariff and non-tariff barriers. They do this through an international treaty called the Agreement on the European Economic Area (EEA). Well, except for Switzerland, of course, which instead has access to the Single Market via a series of bilateral trade agreements.

Confusing? No wonder people had to Google it. To complicate things even further, Britain was originally one of the founding members of EFTA, which had been set up in 1960 as an alternative to the European Economic Community (an organisation that would later become the EU). Britain left EFTA in 1973 when it joined the EEC.

What do our readers think of this alphabet soup of acronyms? We had a comment sent in from Monique, arguing that the only “economically viable” solution for Britain (whose whole economy has developed within the EEC / EU for over 40 years) is membership of the Single Market via the EEA and EFTA. In other words: the famous ‘Norway model’. Is she right?

To get a response, we put Monique’s comment to David Phinnemore, Professor of European Politics at Queen’s University Belfast. What would he say to Monique?

I think, yes, there’s a very strong argument to say that the best possible outcome for the UK, if it does leave the EU, is to remain in the European Economic Area, and probably to secure that through EFTA. The question is whether that’s something that is politically acceptable within the current British debate. At the moment, the clear indications are that the UK government is intent on leaving the Single Market, and therefore seems to have ruled out the EEA option. Whether one can say it’s the only ‘economically viable’ option is open to question, because I think there are a lot of options there and they are probably all equally viable. But I think most people would argue that the UK’s economic interests, if they’re not going to be served by staying in the EU, are best served if the UK stays in the Single Market through the European Economic Area.

For another perspective, we also put Monique’s comment to Sieglinde Gstöhl, Professor of International Relations and Director of the Department of EU International Relations and Diplomacy Studies at the College of Europe in Bruges. How would she respond to Monique’s comment?

Well, that’s a very interesting question. Should the UK ‘re-join’ the EEA? Because [Britain] was actually a founding member of EFTA in 1960, and joining the EEA requires EFTA membership because it’s one of the two pillars of the EEA, with the EU being the other pillar. So, it would be a ‘re-joining’.

It would certainly be economically interesting, but the problem I see is a political one on the UK side, because it would not fit the red lines the [British] government has put forward. It would come with the free movement of persons in the EEA, and also there would be another court taking decisions, similar to the Court of Justice of the European Union, namely the EFTA Court of Justice…

Next up, we had a comment from Odtaa, who lists all of the drawbacks of EFTA membership for Britain. He argues that the UK will have to obey all EU regulations without a say over their creation, will still be part of freedom of movement within the EU, and will still have to pay cash to the EU. Is Odtaa correct about all that?

What would Professor David Phinnemore say in response?

I think, in essence, yes, a lot of what he’s suggested is correct. Politically, it’s very difficult for the UK to stay in the Single Market because of the free movement of labour that that entails. Obviously, if we go back to the referendum, a lot of opposition to continued membership to the EU was based on immigration… The EU has made it perfectly clear that if you want to be in the Single Market or EEA, you have to accept all four freedoms. That position has remained solid since the beginning of the Brexit progress.

I think we do have to be careful about how much regulation the UK would have to take on board. It would not not have to take on all EU regulation, only that related to the functioning of the Single Market. Now, admittedly, that is quite extensive. So, there would be a lot of direct taking of legislation from the EU, as we see in the Norwegian case.

Yes, it would not have a formal role in decision making. It would have to accept decisions of the EU regarding the development of the Single Market acquis. But, on the other hand, it would have a decision shaping role. It would be involved in mechanisms that would allow it to contribute to the formulation of decisions. That said, it would not have a formal say on their adoption, but would nevertheless have to be implementing them. That would give it more influence than if it’s in a Free Trade Area or a Deep and Comprehensive Agreement such as the likes of Ukraine or Canada have or will have. So, one could argue that the EEA gives it more influence than if it were just another outsider or third country.

How would Professor Sieglinde Gstöhl respond to the same comment?

If the UK would (re-)join the EEA as an EFTA member, it would indeed have significant access to the Single Market, including the free movement of persons, as it is now, the free movement of goods, capital, and services. It would not have to make direct contributions to the EU budget, but there is a financial mechanism to improve economic cohesion in the European Union, for example, that all the EFTA countries contribute to.

So, there is a difference and it would not involve entirely the same acquis communautaire or EU rules as EU membership, because some areas like the common agricultural or fisheries policies, the monetary policy, and the Common Foreign & Security Policy, are excluded from the EEA. However, regarding decision making, there are quite some shortcomings, because EFTA members are not EU members; they are not sitting at the EU table, not represented in the European Parliament, the Council of Ministers, or the European Council.

However, there is a mechanism in place which is called the ‘decision shaping’ process… So, whenever the European Commission comes up with a new legislative proposal, which is relevant for the EEA and falls within its remit, the EFTA countries will be consulted at an expert level. So, they can give input, sit in on some of the comitology committees, and they will take a decision on their own side, within EFTA. Now, of course, they would need to speak with one voice, and if the EFTA countries would say ‘no’ to a relevant new legal act, then the European Union could suspend the related parts of the EEA agreement, which would have negative consequences. So, [EFTA saying ‘no’ to relevant new EU legislation] normally never happens.

Next up, we had a comment from Tarquin, arguing that Liechtenstein has access to the Single Market via EFTA but is still allowed to cap the number of EU migrants settling in the country. Is that true? If so, could something similar be arranged for Britain? We asked Professor Sieglinde Gstöhl to respond:

Tarquin is actually correct, Liechtenstein is an EFTA country and therefore has access to the Single Market through the EEA, and when it comes to the free movement of persons, there is a special solution in place, which is very much linked to the fact that it’s a tiny territory, it has 37,000 inhabitants, of which about one-third are foreigners in the resident population, and when it comes to the work force it’s an even bigger share, as 60% of people working in the country are foreigners. So, that was one of the reasons to allow for quantitative restrictions regarding the free movement of persons in the EEA for Liechtenstein.

No other country has this special solution, and it’s also not really an opt-out because Liechtenstein participates; people can move there if they get a residence permit, and half of them are attributed by a ballot, so basically it’s a bit like the Green Card lottery in the United States, and the other half are distributed by the authorities as such. The arrangement does not concern work permits, it only concerns residence permits. Liechtenstein is located between Austria and Switzerland, so a lot of people [work in Liechtenstein] and commute [from Austria or Switzerland], or even from Germany, and there are no restrictions on family reunion. So, if you have a work permit, you can also bring your family members…

I think the UK is just too big, and while this could be a model for countries like Andorra, it certainly cannot be for the UK…

After Brexit, should Britain have a deal with the EU like Norway? Is access to the Single Market via the EEA and EFTA the only economically viable solution for Britain after Brexit? Or are the drawbacks too significant? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

i don’t understand your point here, what’s the link between dictatorship and what happened between england and the eu? they knew the rules before joining the union, more than that uk is one of the founders of the eu and left willingly

Alex Balan in the EU we are not united under any banner when every state has taken own way of life, culture and traditions. For example why would Brussels give a damn about a small village in Greece or Italy when it comes to agriculture?

Munteanu Yes, they had a democratic vote and have decided to leave but who is Brussels then to dictate to them what they must pay as repercussions even so it is not stated in any treaty… Every senior EU delegate criticized the UK for their stance prior to the vote, now how diplomatic is that.

Gregory Cancryn could you please provide a link of the break down of the bill and then explain to us where they pulled out this enormous bill? The UK has been paying more than they have been receiving into the EU…

Interesting that you studied in a european university. Couldnt aford the 12.000£ a year fee in the uk and needed alittle help from european socialism and taxpayers?
Well… brits were never more than pirates and thieves. It suits you well that attitude.

An Gelo Are you literate at all we have been massive contributors for decades without any real benefit to us, how is this been a pirate and thieves?.
Come on I have to hear this!!.
Oh dont forget the massive security and defence measures in place from us that has kept your countries safe because your own countries and the EU were too greedy and selfish to defend their own people.Personally now I say leave them too the Bear.

This “tiny rainy island” is the third largest market for German exports, and the fifth
for French exports. The UK imports 80Bn more from the EU than it exports. ..and yes, the Asian markets are way more competitive which is exactly why the EU fails to break into them

Stefan Aldimirov And you forget that according to European Commission figures 5 million EU jobs are reliant on trade with the UK & given it took 25 years to get the CETA agreement with Canada signed there is no reason to think the fools in Brussels will sign agreements with anyone else any time soon..

Your EU utopian fantasy is about to crash & you have no idea what’s coming your way.

We will negotiate our own deal and the other countries will have NO say or it’s WTO rules which I’m fine with seen as we currently have a 61% deficit with the EU .
Gregory Cancryn the movement is now moving to a clean break and pay nothing that will cripple the EU over night and seen as the banking sector funds the EU we have you by the balls and will then squeeze extremely hard.Accept that you will give us what we want and no FOM of people or ECJ crap.
I know you will probably laugh at this but I assure you watch this space a massive recession is coming over next couple of years.

No, there should only be a ‘deal’ with the EU that we, the British people, love and feel is in our best interests. Norway is in a box which is not for the British. Norwegians have no head for business. Never have. So, following their path of ‘on your knees’ sailor is not for us.

I was bemused this morning when I saw the Swedish politician daring to tell the UK citizens they voted for poverty. Is she serious? Sweden has become a hell hole of debauched misogyny and she’s worried about the UK Brexit vote bringing on poverty. 44% of the Swedish Parliament is female and yet, they refuse to look at Malmo with all that feminism in power. God forbid the UK should find itself in the same position as Sweden. Which, if it doesn’t free itself from Europe, it will surely be. Likewise, Mrs Merkel has sold German women down the Rhine and covering the real story with a blanket as coarse as hessian.

Then there is Switzerland, likewise, they are not content with EU rule and will question their people on the future for them. They must consider some very important issues. The Euro, is it their preference of currency? Along with their financial position in the world. And not to be hidden, the possibility of their population being conscripted to an EU army? Under equality dictate, it will be as Israel, both male and female Swiss, dressed, bella figura, to serve unelected EU despots in a call to fight.

The French, according to their leader, Macron, would vote to be out of Europe tomorrow if he were democratic enough to give the French people a referendum, the way our Parliament gave us. But, he fears that result as it would see the end of him. So, no voice for the citizens of his State.

No freedom of movement for workers you mean. Freedom of movement for anyone and everyone was a idealogically naive liberal policy slipped in undedr a treaty without any public debate..the end result is such wonderful things as the Calais jungle and the attacks at Cologne

A bill is paid for goods or services provided, the UK has received nothing from the EU that requires payment

The truth is the EU is financially incompetent and continually spends beyond its means and makes promises that rely on screwing more money out of the taxpayers in the future. It is because of this irresponsible profligacy that the EU seeks to blackmail the UK into making a payment that has no legal basis at all

Why are we ALL NOT asking uz the following question: Why does the UK want -or even need- a deal with the EU? Is it because they need uz more than we need them? If so, the UK needs to scram. Go do a deal with Bangladesh.

It is good to see this being debated and it has been a good overview. However we think Prof. Gstöhl is not correct about freedom of movement and Liechtenstein. Art 112 of the EEA agreement enables unilateral action and the size of the state is immaterial.

@DE
Would the esteemed academics canvassed care to divulge whether or not they have received funding [past/present/future] as I value objective academic rigour and thus would look more favourably upon their viewpoints.

Agreed, if you dont live in the UK then Brexit has bugger all to do with you, so stop going on as if you know what you are talking about

KarolinaFebruary 11th, 2018

I do know what I am talking about, however, have you thought that your intellect does not allow you to appreciate that and so your only contribution on this page are the same old propaganda lines that you repeat like a parrot even when they have been proven wrong and some personal comments. Unable to come up with anything else…

Nobody, cares about what becomes of the UK. Get over it!

KarolinaFebruary 11th, 2018

Get over yourself Paul. Nobody here admires you like you admire yourself.

Paul XFebruary 12th, 2018

I don’t come here to be admired I come to express a point of view..and the difference between me and you is my points of view are based on facts and experience not media hyped fantasy

First there was a “Norwegian model”
Switzerland wasn’t forced to accept this model and got its own unique deal
Canada wasn’t forced to accept the Swiss or Norwegian model and got it’s own deal….
…..Can you see where I’m heading?

KarolinaFebruary 11th, 2018

Ah, I see… Once again you only post comments that you approve of…. Anything to do with freedom of speech? Either do your job right or go home. Simple.

Karolina, It ceases to be open when people like you, either deliberately, or because of lack of understanding, cannot see past one side of the media hype

You seem to swallow every “the UK is doomed” media story and go on about it on here as if it is the gospel truth….I’ve news for you, for every doom and gloom media story or “expert” opinion you find, you can find another media outlet or expert claiming the exact opposite

Now most mature and level headed people like myself take all the extreme hype with a pinch of salt and believe the reality is going to be somewhere down the middle, just maybe you should try this approach instead of being so blinkered and believing you have some god given foresight on what the future of the UK is.